by Jim Muttram

Of Murdoch, the BBC and Google

An interesting Observer today (for a change) which has prompted some thoughts on the Murdoch/BBC and Google Books debates.

First up, Murdoch. The Observer gave continuing coverage to the reaction following on from James Murdoch’s speech in its story about a dinner row between Robert Peston and Murdoch(!) Murdoch’s argument, in case you missed it, is that the BBC is “state-sponsored” media and because of the “hypothecated tax” of the licence fee can ride rough-shod over the interests of commercial broadcasters.

A comment piece by Will Hutton arguing that Murdoch’s arguments at the Edinburgh Television Festival were “specious and out of date” puts the counter position very nicely; Murdoch is hardly without an axe to grind and if we want to look to examples of market distortion then we have his own company, Sky’s own past practices to study.

It was the voracious bidding for sports rights – cross subsidised by the vast Murdoch media empire – which set up Sky for its own meteroric rise to (pay TV) market dominance. The complaints about the BBC from Murdoch, and other parts of the media, look more like a hurt industry looking around for someone to blame as ad markets go south. Google is the other target, as well as, more generally, “the internet”.

In fact, the traditional media industry has seen steady declines for years. The biggest problem is not the BBC or the internet but the industry’s own lack of foresight in building out multiple revenue streams.

All businesses need a mix of models if they are not to suffer disproportionately in the downturn (even as they capitalise disproportionately in the upturn). The healthiest have a blend of cyclical and counter-cyclical models and a spread of markets and sectors.

The very characteristic of the BBC that Murdoch is complaining of – the fact that it is too big and is into everything – will probably turn out to be its achilles heel. It is very unlikely that the BBC will enjoy above-inflation increases in the licence fee in the future – in fact, if the Tory’s win the next election a cut is probably on the cards. This means that its self-proclaimed need to cover the widest possible remit will see it stretching its resources more and more.

This in turn means that those in the niches will beat the BBC in their particular parts of the market. Already, the BBC is not best for sport, and it shouldn’t be the best for hyper-local services, either, once those really get going. My own company, Reed Business Information, is in 17 business-to-business markets in the UK and in none of them are we beaten by the BBC – or for that matter Google. We have simply more resources relative to our niches.

It is undoubtedly a good thing that all the worlds books be available to everyone – just think what that could do for education in the developing world, for example. But there are clearly dangers if Google, as a commercial enterprise, has exclusive rights to those books.

Google argues that it is motivated by philanthropy – we have only their word for that, and circumstances can change. There are parallels here with Sky and sports rights. Sky was able to outbid the incumbents and therefore won a major advantage in the market place. Google, by virtue of their exceptionally deep pockets and technical skills has been able to accomplish something in the book field that many thought impossible.

If competition is to reign then there either needs to be a second digital library of all the world’s books (who would want Microsoft, for instance, as one of the few companies with deep enough pockets, as an alternative?) or some other plan needs to be considered.

How about an international equivalent of the British Library, perhaps as a branch of the United Nations, mandated with digitising every book and making them available at a nominal (or no) cost to anyone who wants to build a service on top of the basic library? A sort of digital Library of Alexandria? There would be a lot of detail to be worked out, but nobody said this transition to a better digital world wouldn’t be complicated!

The comment piece arguing that Google needed to be policed so that its power in the digital space isn’t monopolised is I think well argued; clearly there have been huge benefits from Google’s efforts to digitise the world’s information (the digital map space wouldn’t exist in its current excellent form had it not been for Google’s determination and ingenuity. However, beware the unintended consequences.